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Southwest Airlines. Christine Dao Katrina Elicagaray Kimberly Tran April Weir. Airline Regulation. 1938 Civil Aeronautics Act Civil Aeronautics Authority (CAA) Its Mission. The Beginning…. Founded in 1967 Founders were Rollin King, John Parker and Herb Kelleher. DAL. HOUSTON.

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southwest airlines
Southwest Airlines

Christine Dao

Katrina Elicagaray

Kimberly Tran

April Weir

airline regulation
Airline Regulation
  • 1938 Civil Aeronautics Act
  • Civil Aeronautics Authority (CAA)
  • Its Mission
the beginning
The Beginning…
  • Founded in 1967
  • Founders were Rollin King, John Parker and Herb Kelleher
the napkin concept

DAL

HOUSTON

SAN ANTONIO

The Napkin Concept

“Herb, let’s start an airline” and “Rollin, you’re crazy. Let’s do it!”

mission
Mission
  • The Mission of Southwest Airlines
  • To Our Employees
executives
Executives
  • Headquarters in Dallas, Texas
  • Current Leadership

Herb Kelleher – Chairman of the Board and Chairman of the Executive Committee

Jim Parker – Vice Chairman of the Board and CEO

Colleen Barrett – President, COO, and Corporate Secretary

top 3 strengths
Top 3 Strengths

Structure

Operations

Culture

Beliefs

Policies

Innovation

southwest vs the majors
Southwest vs. the Majors
  • Debt
  • Pricing
  • Hub & Spoke
  • Labor Costs
  • Operations
  • Understanding the Market
  • Customer Service
slide10
Major airlines

High debt

High daily losses

Low cash

Southwest

Little debt

Low daily losses

High cash

Major airlines include Alaska Air, America West, America Trans Air, American, Delta, Continental, Northwest and United. Not included is US Airways, which is bankrupt and no longer traded on the NYSE.

Debt
slide11

Airline AftermathHow the sector has performed since 9/11

Carrier

Stock % Change Since 9/11*

Earnings Comparison

Q2 2001

Q2 2002

American

-69%

-$105 million

-$465 million

US Airways

-94

-24 million

-248 million

Delta

-55

-123 million

-162 million

Northwest

-55

-55 million

-93 million

Continental

-76

42 million

-35 million

Southwest

-18

176 million

85 million

United

-90

-292 million

-341 million

-

America West

-76

-15 million

-10 million

*As of Thursday, Sept. 5, 2002. **Excludes all charges.Source: Company reports, Baseline, TSC Research

prices
Prices
  • Competition
  • Seat prices
  • Operation costs
    • Fuel
    • Airport fees
  • Hubs vs. surrounding airports
labor costs
Labor Costs
  • Union vs. Non-Union
    • Salaries
    • Labor costs as a percentage of revenues
    • Employees per flight
operations
Operations
  • Maintenance
  • Training
  • Boarding procedures
  • Airport Fees
  • Plane design
  • Idle time
  • Food Service
understanding the market
Understanding the Market
  • Niche market
    • Long haul flights
    • Short haul flights
  • Price sensitive
  • High customer service needs
customer service
Customer Service
  • The Belief
  • The Policies
  • The Results
the belief
The Belief

“Southwest people believe that customer service involves more than an objective understanding of the customer’s need. It also means, …, “being attentive to the person behind the need, and responding to the person more than just responding to the need.” NUTS! Southwest Airlines’ Crazy Recipe for Business and Personal Success by Freiberg & Freiberg

the policies
The Policies
  • Seating space
  • Boarding procedures
    • Ticketing
    • Safety
  • Timeliness of flights
  • Amenities
the results
The Results

Best on-time service + Best baggage handling + Best customer Service = Triple Crown Award

5 Years Straight

it is helps business strategy
Deploy’s Enterprise Software

PROS Revenue Mgmt.

CALEB Technologies Corps CrewSolver Software

I2 Service Inventory Management

Computerized Reservation System

RAPID CHECK-IN

Automated boarding passes

IT/IS Helps Business Strategy
focused cost leadership
Focused Cost Leadership
  • High frequency, short hops
  • Low fair strategy
  • Cost-effective inventory management
  • Efficient and cost-effective recruitment
  • Unique, high level customer service
what major airlines are doing to compete
What Major airlines are doing to compete
  • Cutting jobs
  • Retiring older planes
  • Streamlining routes
  • In the future, closing hubs
combating competition
Combating Competition
  • Structurally competitive through Operations
  • Successful in utilizing Information Technology and Information Systems
  • Creating a culture of Innovation and Great Customer Service